The next few years: where e-food in Switzerland is heading

COVID-19 economy, Ukraine crisis, supply chain problems, inflation, consumer reticence. The retail sector has been going through extraordinary times since 2020. After the unparalleled extraordinary boom in online retail, some companies are suffering a hangover in view of the looming economic crisis. So what’s the situation in the Swiss online food retail sector?

Where’s Swiss e-food heading?

At this year’s K5 conference at the end of June in Berlin, Jochen Krisch, conference co-founder and publisher of the Exciting Commerce industry blog, who is one of the pioneers on the German e-commerce scene, gave a presentation on the “State of Online Retail”. He provided a general benchmark indicator of how companies came through the last crisis. As an underlying indicator, Jochen chose the difference in revenue from 2019 to 2022 which was compared on a percentage basis.

Under this approach, the following interpretation applies:

• “Any company that has (more than) doubled its revenue compared with 2019 is performing extremely well and has taken optimal advantage of the coronavirus period.”
• “Companies which have achieved growth of 75% to 100% have done a good job during the COVID-19 period and are in the green zone (with assumed growth rates of between 20% and 25% a year).”
• “Only companies that have achieved growth of less than 50% since 2019 should seriously reflect on what went wrong during the COVID-19 period.”

This rule of thumb is now being applied to the Swiss e-food market and its main players. The following is clear:

Overall, the four leading Swiss e-food players have doubled total revenue since 2019 based on the rule of thumb outlined above.

The more recent players, Farmy and especially myMigros, got the maximum out of the COVID-19 pandemic in terms of revenue which they more than doubled. But Coop and Migros Online are also in green territory, posting growth of over 80%. Restrictions on the workforce, storage space and delivery structure were the greatest impediments. According to Krisch’s rule of thumb, the main players on the Swiss e-food scene score good ratings.

Looking into the crystal ball – more trends on the Swiss market

We take a look to the future and at other trends that will become increasingly relevant to the Swiss e-food sector. The past two years have shown that online food retail has the potential to expand beyond its niche position. And it can set new standards for the entire e-commerce sector as a pacemaker and implementer. Delivery availability, high order frequency and speed are relevant topics here.

This means e-food providers – as alluded to by Jochen Krisch for the German market – also look set to become platforms of the next generation in Switzerland, creating new added value and a successful eco-system for customers. At least if the players cultivate and include the non-food sector more in addition to food.

The trend is also moving towards same-day delivery and plannable delivery slots of a maximum of one hour when the customer wishes to wait at home to receive the order. Customers in Switzerland are also increasingly demanding flexibility and shorter waiting times.

Quick commerce will continue to play a less significant role in Switzerland due to high salary costs and statutory regulations on working on Sundays and will not achieve the same penetration as in the rest of the DACH region. The caution of existing players, financing problems with venture capital providers and their cost-cutting measures suggest Switzerland may even become a zone that’s free of quick commerce again in 6 to 12 months.

The fact that Switzerland’s e-food market is a challenging one for foreign players is highlighted by previous attempts at entering the market by competitors abroad. Gorillas’ market entry is still restricted to a P.O. Box address in Zurich – due to the quick commerce startup’s current financing problems and initial withdrawals from various European markets, Switzerland may also be off the table.

Rohlik is also occasionally touted as a new candidate for the Swiss e-food market. Here I assume that Rohlik can use the capital required for this kind of market entry (warehousing structure, national organization including purchasing, fleet and workforce, etc.) more efficiently and with much greater leverage in its new country markets where it can expand. Bigger players can also have a tough time on the Swiss market with its special characteristics as underlined by the high-street adventure of the French Carrefour Group which attempted expansion from 1999 to 2007.

As far as delivery fees go, there’s a growing shift towards ‘free delivery’. This trend will also increasingly take hold in Switzerland. While delivery fees are still widespread, providers shouldn’t unnecessarily put delivery costs under pressure and should in parallel improve efficiency by streamlining their processes in the warehouse and on the last mile using automation.